The US Dollar Has Depreciated And Oil Has Soared. China Is The Biggest Victim.

At the recent G8 summit, record oil prices and rising food prices caused by the weaker dollar will be discussed at the conference.

The summit will push oil prices down and support a strong dollar.

But whether the US dollar will be able to usher in a big reversal is unknown. In the process of the dollar depreciation and oil inflation, China has become the biggest victim.

In the Bretton Woods system, the US dollar corresponds to a certain amount of gold, and the US dollar and gold can be freely convertible, so the United States can not spoil currency.

After the breakup of the Bretton Woods system in 1966, gold was no longer the basis for currency issuance, and the dollar became a credit currency.

In the past 40 years, the US dollar index has gone down all the way.

The United States is undoubtedly the biggest beneficiary of the depreciation of the US dollar.

The United States has over consumption, the whole world has borrowed it, and the US dollar has shrunk overnight due to the depreciation of the US dollar.

In the subprime crisis, at least half of the subprime loans were sold to overseas financial institutions.

The weak dollar also helps us export growth.

The depreciation of the US dollar also pushed up the price of oil and other commodities. Khalil, the rotating chairman of OPEC, said that every 1% depreciation of the US dollar means that oil prices will rise by US $4.

A simple set of data shows that the purchasing power of China's foreign exchange reserves has been seriously weakened during the depreciation of the US dollar: in 2001, China's official foreign exchange reserves amounted to US $200 billion, and international oil prices were around us $25 per barrel, and China could purchase 8 billion barrels. In March 2008, China's official foreign exchange reserves were the world's largest, reaching US $1 trillion and 680 billion, and China could purchase 16 billion 800 million barrels at 100 US dollars in oil price. Although China's foreign exchange reserves increased by more than 7 times, the real purchasing power increased by 1 times.

Therefore, the largest loss of the American subprime crisis is not the United States, but China, China, which is lost not only in foreign exchange reserves, but also caused by a dividend, evaporating tens of trillion of national wealth, missing a chance of financial rise, and becoming the worst country in the butterfly effect of the subprime crisis.

But in addition to the US dollar, there are no second monetary assets that are large enough in liquidity and capacity to carry global wealth.

So other countries are looking for a stronger dollar, but the reason for the earlier dollar appreciation is not the announcement by the US Treasury that the US war means expelling money into the US dollar.

From the present point of view, the US government has not explicitly stated its intention to intervene in the US dollar, so the government and the market have not reached a broader consensus in recent years.